Australian dollar dumps as Volcker returns to the building

au.investing.com/analysis/australian-dollar-dumps-as-volcker-returns-to-the-building-200548392

By David Llewellyn-Smith | Feb 09, 2023 10:48

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Market mayhem continues. DXY was firm and EUR weak:

AUD looks ripe for more falls:

Oil and gold fought the Fed:

Metals were more circumspect:

Repeat after me: the Chinese reopening is iron ore bearish:

EM stocks (NYSE:EEM) held on:

Junk (NYSE:HYG) did not:

As the curve inversion turned even more bloody:

Stocks folded:

Bloomie has the wrap:

A selloff in tech stocks weighed heavily on trading Wednesday, with the most-recent string of Federal Reserve speakers reinforcing the idea that interest rates will need to keep climbing to quash inflation.

Their tone was clearly intended to catch the market’s attention in what looked like a concerted effort to push back against the dovish read of Jerome Powell’s interview Tuesday, noted Krishna Guha at Evercore ISI. From Fed Bank of New York President John Williams to his Minneapolis counterpart Neel Kashkari and Governor Christopher Waller, the message was clear: policy may need to be tight for a while.

Those remarks just gave credence to the recent hot trade in the rate-options market — where several big wagers on the Fed’s benchmark reaching 6% have popped up. That’s nearly a percentage point higher than consensus. For several market observers, such hawkish positioning makes it tough for equities to keep grinding higher — especially after the rally that brought the S&P 500 to overbought territory.

The Fed’s nowcast model of inflation is reaccelerating, though CorePCE so far is not:

INLFATION

Either way, markets are toying with new highs for the terminal rate:

FEDRATE

With the ECB pivoting and strong US jobs, there is scope for the risk correction to run as DXY rises. Markets are WAY overbought EUR:

AUD will follow it as, usual.

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Central Banks

Interest Rates

Next Meeting

RBA

3.60%

Apr 04, 2023

BOE

4.25%

May 11, 2023

ECB

3.50%

May 04, 2023

FED

5.00%

May 03, 2023

SNB

1.50%

Jun 22, 2023

BOC

4.50%

Apr 12, 2023

RBNZ

4.75%

May 24, 2023

BOJ

-0.10%

Apr 28, 2023

CBR

7.50%

Apr 28, 2023

RBI

6.50%

Apr 03, 2023

PBOC

3.65%

BCB

13.75%

May 03, 2023

S&P/ASX 200	7,046.30	+12.20	+0.17%
ASX 200 Futures	7,066.5	+41.0	+0.58%
ASX All Ordinaries	7,232.40	+13.00	+0.18%
US 500	3,986.7	+15.4	+0.39%
Dow Jones	32,394.25	-37.83	-0.12%
China A50 Futures	13,171.5	+10.5	+0.08%
Dollar Index	102.230	+0.124	+0.12%

Crude Oil WTI	73.65	+0.45	+0.61%
Natural Gas	2.160	-0.002	-0.09%
Gold	1,986.85	-3.55	-0.18%
Silver	23.383	-0.037	-0.16%
Copper	4.0750	-0.0020	-0.05%
US Sugar #11	21.37	+0.44	+2.10%
US Coffee C	174.18	-2.72	-1.54%

Australia 10Y	3.316	+0.004	+0.12%
Australia 5Y	3.031	+0.017	+0.56%
New Zealand 10Y	4.162	+0.058	+1.40%
U.S. 10Y	3.579	+0.011	+0.31%
Japan 10Y	0.303	-0.016	-5.02%
China 10Y	2.878	+0.015	+0.51%
Singapore 10Y	2.914	+0.028	+0.95%

CSL	284.00	-1.00	-0.35%
Woolworths	37.590	+0.030	+0.08%
ANZ Holdings	22.620	-0.020	-0.09%
Commonwealth Bank Australia	95.750	-0.310	-0.32%
Telstra Group	4.200	+0.010	+0.24%
National Australia Bank	27.130	-0.530	-1.92%
BHP Group Ltd	45.075	+0.675	+1.52%

Australian dollar dumps as Volcker returns to the building

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